Academic journal article Energy Law Journal

So, the World Is Getting Warmer: What Now? New Literature on Electric Sector Options and the Cost of Climate Control Legislation

Academic journal article Energy Law Journal

So, the World Is Getting Warmer: What Now? New Literature on Electric Sector Options and the Cost of Climate Control Legislation

Article excerpt

While the nation heatedly debated the science behind anthropogenic global warming, quieter work was being done on the range of options available to address the issue and the associated cost. Assuming, as now seems to be the case, that there is a political consensus that warming for which we are responsible is under way, the obviously ensuing questions are what we can do about it, and how much it will cost. These issues are particularly acute for the electric industry, which is responsible for roughly forty-two percent of the nation's C02 emissions.1

Activity in this area has quickened ih the last two years, and we now have relatively comprehensive visions of generation alternatives, undertaken by the Electric Power Research Institute (EPRI)2 and McKinsey & Company (McKinsey).3 One can draw from this literature a sense of cautious optimism that the technology to address global warming is either available to us or within reach. Yet, the technical challenges are daunting, the cost is substantial, and the economic impact will, in all probability, be distributed unevenly throughout the economy.

With respect to costs, both EPRI and McKinsey have taken a stab at estimating the economic impact of the anticipated change in generation resources. In addition, , a slew of recent studies have been undertaken analyzing the impact on the GDP of the Waxman-Markey bill.4 Good work synthesizing (and criticizing) the studies has been done recently by the Congressional Research Service, leading to the conclusion that decisions regarding climate control legislation are unlikely to be made on the basis of reliable evidence of its cost.

I. WHAT CAN BE DONE?

With its Prism/Merge Analyses, EPRI has meaningfully revised the greenhouse reduction targets initially studied in 2007. Jn 2007, EPRTs analysis of the electric industry's available options for addressing global warming was aimed at meeting a gross reduction in annual C02 emissions by the U.S. electric sector of forty-five percent by 2030, relative to estimates in the Energy Information Administration's (EIA' s) 2007 Annual Energy Outlook (AEO) Base Case. Though the forty-five percent figure seems significant, the EIA Base Case through 2030 showed steadily increasing annual emissions associated with the U.S. electric sector, rising to roughly 3.3 gigatons tons per year, up roughly lgigaton from 2005 levels. The result was that EPRJ' s 2007 study targeted a relatively modest reduction in current emission levels. By comparison, the Waxman-Markey bill calls for economy-wide Greenhouse Gas (GHG) reductions of forty-two percent below 2005 levels by 2030, and eighty-three percent below 2005 levels by 2050.5 Those targets are more in line with the fifty percent reduction in global emissions by 2050 to which the G8 committed at the summit in Heiligendamm in 2007, and are consistent with the seventy-six percent global reduction by 2050 targeted in the Stern Review.6

Clearly, EPRI's 2009 Prism/Merge Analyses respond to new political reality and reflect a heightened sense of urgency. Looking ahead to 2030, EPRTs analyses target a forty-one percent reduction in annual C02 emissions by the U.S. electric sector relative to 2005 levels, and a fifty-eight percent reduction relative to 2005 emissions, if reductions due to electric transportation and electro-technologies are included. EPRI President and CEO Steve Specker's presentation "Creating Our Future: Meeting the Electricity Challenge" makes it clear that EPRI's revised approach is designed to address the goals articulated in the Waxman-Markey proposed legislation.

How these goals can be met is obviously the central question. EPRI answers in two ways: with and without a commitment to the development of new processes for (a) carbon capture and sequestration; (b) advanced nuclear reactors; and (c) plug-in electric vehicles. EPRI's analysis makes it plain that the more economical and more efficacious choice will involve our collectively banking on these new technologies, investing in what it refers to as a "Full Portfolio" of options for addressing carbon reduction. …

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